Could another storied American carmaker be shutting down? The Los Angeles Times reports, "Speculation is mounting that Ford Motor Co., preoccupied with reviving its Ford and Lincoln brands, might decide to retire the Mercury nameplate rather than spend scarce resources trying to restore its former luster." Ford has rebuffed speculation about the imminent death of the Mercury brand for years, but "the conjecture got a boost last week when Jerome York, a former auto executive and advisor to billionaire investor Kirk Kerkorian, said shedding the brand would be a smart move for the struggling automaker." Why does York's opinion count? Because Kerkorian's company recently revealed that it owns about a 5% stake in Ford, and it looking to purchase more of the company.
Reuters reports that Kerkorian "expects the No. 2 U.S. automaker to sell its Volvo and Mercury brands, according to an interview published online by the Automotive News," a trade publication that often breaks automotive news stories to the mainstream press. York, the Kerkorian aide, was quoted telling the News that he expects Ford to "put Volvo on the market within the next year and a half," and added, "There's no rational reason for keeping Volvo and Mercury."
The Detroit News reports that York "subsequently called and e-mailed" Ford officials "to apologize for the remarks."
But the cat was out of the bag…a major Ford investor, who is looking to buy more of the company, apparently wants to kill off Mercury and sell Ford.
According to the Cleveland Leader, industry analyst Aaron Bragman of Global Insight believes "Mercury has one more product cycle left in it, and then will most certainly be retired as a brand."
The Los Angeles Times reports that Mercury sales have dropped off dramatically. "After regularly selling half a million vehicles a year during the mid-1980s, Mercury sold only 168,000 cars and sport utility vehicles last year. Its U.S. sales are down 23% this year -- the biggest drop for any brand except Chrysler and Hummer."
We can see Ford parting with Mercury. Though the brand has been around since the late 1930's, and enjoyed a brief span of pop-culture popularity after James Dean made the '49 Mercury Club Coupe a cult icon in Rebel Without a Cause. The Cougars of the '60's and '70's weren't bad cars, and had a following. Today, however, it's awfully hard to justify buying a $24,000 Mercury Mariner when it's essentially a $20,000 Ford Escape with a different grille and color-contrast seats. Mercuries are now twinned Fords with higher price tags. A Mercury Milan is, for all practical purposes, an expensive trim level of the Ford Fusion. A Mercury Mountaineer a barely modified Ford Explorer. The list goes on, but the difference between the Ford and Mercury models usually isn't enough to justify the step up in price to the Merc.
Volvo is a different story. Lewis Booth, chairman of Ford's European division, told the Detroit News this week that "Volvo is not for sale." Volvo is losing money, but the News reports that Volvo's financial troubles are "a function of tight global credit markets" and the weak position of the dollar against the Euro, not a function of lost sales. "European-based brands are having a tough time making money on vehicle exports to the United States because of the dollar's slide."
Volvo still makes a number of unique vehicles with a significant place in the market. We believe it will turn around. What's your take?
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